Personal Finance

I have no credit cards but pay all my bills on time — should I get a cash back credit card?

Christy Bieber

Published: December 19, 2024 10:20 am

Last Updated: December 19, 2024 5:10 pm

Key Points from 24/7 Wall St.:

• A Reddit user asked if they should get a cash back credit card.
• The user says they pay their bills all the time and live within their means.
• When you can be responsible with credit, getting a credit card usually makes good senses.
• The right cash back credit card can earn you hundreds, or thousands of dollars a year for free. Click here now to see our top picks. ^(Sponsor)

Is getting a cash back credit card a good idea?

A Reddit poster recently asked this question. The poster said they had no current credit cards at all but paid their bills on time and made plenty of money to afford everything they need.  Their goals for getting the card were to avoid the hassle of separately paying a bunch of different bills each month, and to earn cash back on money they were spending anyway.

So, should the Redditor act? Will getting the card help them accomplish their goals or cause them other long-term financial problems that outweigh the benefits?

If you can be responsible with credit, you should have a credit card

In theory, there is room for debate about whether the poster should get a cash-back card or not. Some finance experts believe that credit cards are always dangerous. These experts usually site the potential to overspend and end up in debt on a card with a high rate. They may also point to studies showing that using a card makes you buy more since you’re disconnected from the actual spending of your cash.

In reality, however, most of these downsides are very minimal and can be overcome — and the upsides of credit cards are significant as long as one specific condition is met. The condition: You must be able to count on yourself to be responsible with the cards. If you struggle with living within your means, have no budget, and aren’t 100% sure you won’t end up carrying a balance, then using a card can indeed be too dangerous for you.

However, since this Reddit user said they have more than enough money to pay their bills, they most likely aren’t out of control when it comes to their consumption. There’s no real reason to believe getting a card is going to send them on a spending spree that leaves them deep in debt, and they can implement other measures to avoid that, such as imposing a limit on impulse purchases or tracking spending.

Of course, if there is concern about overspending, a financial advisor could offer invaluable advice both about how to live within a budget and about whether getting a card is likely too great a danger.

Why having a card makes good sense in most situations

It’s simple. Cards have huge advantages as long as you don’t carry a balance and pay interest. When you have a credit card:

• You can earn cash back, as the Reddit poster pointed out. If your card pays 2%, then you get $2 for every $100 you charge on it. This adds up over time — and some cards offer even more cash back on specific purchases so you can maximize earnings.
• You can simplify your finances. The poster said they pay tons of different bills during the month, such as for streaming services, cell service, and utilities. You can sign up to autopay these things on your credit card and just make one payment to your card monthly
• You can track spending better. You’ll have your statement, which shows a record of what you spent. This can actually make budgeting easier as you can look back at where your money is going.
• You can build credit. Using credit responsibly develops a positive payment history and a good credit utilization ratio, which are the two most important factors in the credit scoring formula.
• You can get cardholder benefits like return protection, free car rental insurance, and more.

With all these benefits, the Reddit poster — and anyone else good at living within their means — should get a card. The only thing left to do is to compare offers and see which one is the best fit for your individual needs.

Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.